On Monday, October 27, 2008 I had the honor of supporting Nuçi's Space in their bid to obtain exemption from the Athens Clarke County Ad Valorem Tax. We were in the courtroom for approximately 8 hours and at this point have not received a decision from the judge. I will append the descision to this blog post once we get it.
For those of you who don't know what Nuçi's Space is....it is a local non-profit whose mission it is to prevent suicide by providing obstacle-free mental health treatment for musicians suffering from depression and other such disorders, as well as to assist in the emotional, physical and professional well-being of musicians through its caring and healthy gathering space.
Just a little bit of history...Nuçi's Space first applied for property tax exemption in 2005 but was denied by the Tax Assessor's office. However, in 2006 the Georgia general election ballot included a referendum that seemed to solidify the contention that Nuçi's's Space should qualify for property tax exemption. The referendum read:
"This section of this Act expands the ad valorem tax exemption for property of charitable institutions so that the exemption will apply to real estate or buildings which are owned by a charitable institution that is exempt from taxation under Section 501(c)(3) of the federal Internal Revenue Code and used by such charitable institution for the purpose of securing income so long as such income is used exclusively for the operation of that charitable institution. "
This referendum passed with 70% support of Georgia voters and law took effect in January of 2007. Due to its passage, Nuçi's Space reapplied for the exemption in March 2007. Once again the Tax Assessor's Office denied the application. Confident in their position, Nuçi's Space approached Jim Warnes of Timmons, Warnes & Anderson to represent them in an appeal to the Board of Equalization. In late 2007 the Board of Equalization overturned the Tax Assessors decision and granted the exemption to Nuçi's Space. Shortly thereafter the Tax Assessors office made the decision to appeal to the Superior Court.
One more tidbit to consider, the assistant county attorney who is heading up the case on behalf of the Tax Assessors office, Amy Gellins, main argument against Nuçi's Space is that Nuçi's Space occassionally rents out the performance area of the building to private parties for a fee. She knows this because she attended such a party. The people who tend to have parties at Nuçi's Space are usually supporters and think bringing people into the space who would otherwise would not encounter Nuci's Space and their mission, would garner more support for the organization. The money that is raised by renting the space is also dedicated to providing the mental health services to Nuçi's Space clients. Since she attended a private event at Nuci's Space that was rented for a fee, she contends that the organization's building should not be tax exempt because it is used to make money through causes that are not charitable in nature.
The three prong test that must be passed by an entity seeking exemption is:
"First, the owner must be an institution devoted entirely to charitable pursuits;
second, the charitable pursuits of the owner must be for the benefit of the public; and
third, the use of the property must be exclusively devoted to those charitable pursuits."
Gellins's contention is that the use of the property is not EXCLUSIVELY devoted to the charitable pursuits because the parties and attendees of such parties having nothing to do with Nuçi's space so the space isn't being devoted exclusively to the charitable pursuits. Our contention is private persons rent Nuçi's space, they pay a fee, and that money is used to support the charitable pursuits so the party itself is a fund raiser whose funds are devoted to the charitable pursuit.
If you are an attorney and you look at this case in a vacuum which I suppose is how attorney's are trained to think, you tend to miss the big picture of one of the premises of property tax exemption and that is to afford non-profits better use of their funds to benefit the public as a whole. You might wonder what kind of money we are talking about. The amount of the property tax bill this year is about $6500.00. This amount of money will enable Nuçi's Space to help 10% more patients during the year. There isn't a calculator that has enough digits to calculate what an infinitesimal amount this is compared to the ACC Annual budget. Nuçi's Space fills an enormous space left by uninsured individuals in the county. The cost of a counseling session with a licensed therapist is well over $125 and a session with a licensed psychiatrist is well over $200.00. The therapists and psychiatrists are discounting their rates for Nuçi's Space and Nuçi's Space pays over 80% of the remaining fees for each client. If these people weren't able to seek help at Nuçi's Space at minimal cost ($10-$20 per session) they would end up in emergency rooms and mental health facilities all at an undiscounted cost to the tax payer!
Judge Lawton Stephens heard the case, and no matter what his decision, it will be made with respect to the law. He asked very poignant questions, was attentive and caring about the subject, and I know he is a fair judge. If he finds in favor of ACC, Nuçi's Space will have an option to appeal to a higher court in the state. Thus far Jim Warnes has not billed Nuçi's Space for any of the legal fees. We are not sure if he will be able to take this case any further and we hope it won't be necessary. For Nuçi's Space $6500 is a big chunk of money. For ACC this is a crusade. Tax exemptions have been granted to at least half a dozen other non-profits who use their space for events and purposes not related to their charitable work, even though those organizations put every penny raised through those events back into their charitable work. ACC saw fit to approve their applications for exemptions, though no one could explain how Nuçi's Space's operations differ from the other non-profits, and George Hanson, the Chief Appraiser in ACC, on the stand under oath admitted as much. Unfortunately the equality argument was not made in the original appeal so this argument couldn't be considered by Judge Stephens.
Hopefully if Nuçi's Space wins this appeal, ACC will drop the matter and move on to spending tax payer dollars in more beneficial ways.
UPDATE
The week of December 8th, Judge Stephens handed down his decision that Nuci's Space should be exempt from property tax and upheld the decision of the Board of Equalization. We ask that everyone in the community support us in requesting ACC not appeal this latest decision and let Nuci's Space continue their good work.
